Cherokee Group’s founder, James P. Argyropoulos has ended his bid to stop an investor group’s takeover of Cherokee and quit as chairman and chief executive of the Sunland apparel and shoe concern.
In resigning, Argyropoulos ceded operating control of Cherokee to President Robert Margolis, who immediately succeeded him as chief executive. Argyropoulos’ departure also ended his 15-year reign at Cherokee, which began in 1973 when he started the company from his shoe repair business in Mar Vista.
Margolis and two other Cherokee executives--Cary D. Cooper, executive vice president, and Jay L. Kester, marketing head of Cherokee’s apparel division--are members of the investor group, Green Acquisition Co., which is close to completing a takeover of Cherokee for $174 million in cash and securities.
Argyropoulos, who owns 14.5% of Cherokee, had filed suit attempting to block the offer, which he asserted was priced too low and potentially harmful to the company’s future performance. But after his bid for an injunction was denied by a federal court in Los Angeles, Green last week completed a $14-a-share cash tender offer that gave it 49.9% of Cherokee’s stock.
Green, which was organized by Deutschman & Co., a Los Angeles investment firm, now is seeking stockholder approval to buy each of the remaining shares for $12 in cash and bonds priced at $2.
Argyropoulos’ resignation was part of a settlement with Green that also resulted in Arthur Argyris, Argyropoulos’ twin brother, resigning as a director and that calls for the lawsuits to be dropped.
Argyropoulos could not be reached for comment Thursday. Margolis, Cooper and Kester all were declining comment, Cooper said. However, Marc W. Rappel, a lawyer for Deutschman, said the settlement “has achieved peace at the company and has established a strong and unapposed line of management.”
A Greek immigrant, Argyropoulos started Cherokee with $50,000 he earned from his shoe repair shop. After diversifying into women’s apparel in 1980, Cherokee grew rapidly. Its fiscal 1987 sales totaled $140 million. But the man in charge of the apparel division was Margolis, and in court papers Argyropoulos said he and Margolis disagreed for years over how Cherokee should be run.
Argyropoulos does not leave empty-handed, however. The settlement calls for Cherokee to pay him roughly $3 million for the remaining three years of his employment contract, Rappel said. Argyropoulos also stands to receive about $25 million for his Cherokee stock if Green’s takeover goes through.